China lending shrinks as Wen Jiabao wrestles with inflation

China's bank lending last month was the least since 2009 as inflation stayed above the government's target, highlighting the risk that efforts to tame prices will trigger a slowdown.

New loans were 470 billion yuan ($73.7 billion), central bank data showed on Friday. Consumer prices rose 6.1% compared with a 4% goal, a statistics bureau report showed. M2, the broadest measure of money supply, rose 13% from a year earlier, the least in almost a decade, and data for foreign-exchange reserves pointed to capital outflows.

Premier Wen Jiabao's government must weigh whether to ease monetary policy after data on Thursday showed exports grew at the slowest pace in seven months and as small businesses complain of a credit squeeze. Asian policy makers face a "delicate balancing act" as inflation remains elevated while Europe's sovereign-debt crisis threatens growth, the International Monetary Fund said on Thursday.

"The government will not ease policy in a broad-based manner until late November or early December, although it may ease in a targeted way," said Ding Shuang, a Hong Kong-based economist at Citigroup . He said that the money-supply figure may understate liquidity because of the popularity of wealth- management products.

A $4.2 billion increase in China's currency reserves in the third quarter to $3.2 trillion was the smallest gain since 2000, according to Bloomberg data. Weakness in the euro pulled down the dollar value of China's holdings in that currency and capital outflows may also have limited the gain, Ding said.

The Shanghai Composite Index closed 0.3% lower. The yuan rose 0.1% to 6.3776 per dollar in Shanghai as of 3:49 p.m. local time.